Vivo Energy Kenya, trading under the Shell-branded fuel products, shed its market share by 1.04 per cent in the first three months of 2023 despite dwindling market share of small and medium-sized firms being hit by thin margins.

Though still a market leader, Vivo closed 2022 with an overall market share inclusive of exports at 16.45 per cent compared to March 2023 when the split was 15.41 per cent, data from the Petroleum Institute of East Africa (PIEA) indicates.

The drop reveals the increasing competition among the top 10 Oil Marketing Companies (OMC) seeking to fill the void left by small local oil companies impacted by the scrapping of wholesale fuel prices in 2021 which dented their profits.

Rival oil marketer French-owned Rubis Energy, whose market share rose to 10.54 per cent end-March compared to the previous 10.01 per cent in December 2022, is among the players who are gradually closing the dominance of Vivo Energy in Kenya.

In the same period, local dealers such as Stabex, Lakeoil, Hass, and Petro, also increased their market share. “Vivo Energy, TotalEnergies, Rubis Energy and OLA Energy maintained their top five position with Rubis Energy gaining growth in overall and local market share coinciding with their growth in the retail segment,” PIEA stated in the report.

Fuel imported
The report, which tracks the flow of fuel in the market, indicates that about three-quarters of fuel imported into East Africa’s biggest economy is consumed through retail outlets and resellers. In terms of the local petroleum sales market, Vivo’s share also plunged from 22.12 per cent to 21.61 per cent during the period.

The firm currently has 286 fuel stations after it announced it was planning to add extra 20 branches by the end of 2022 to cement its position as it takes over spaces left by small players. Big OMCs have the capability to negotiate better deals with suppliers and secure lower prices for their products, which further widens the gap between them and the smaller competitors.

As a result, consumers are often drawn to the top players due to the perceived reliability and value they offer. The dwindling market share of small and medium-sized firms could lead to reduced competition, potentially impacting product pricing and overall market efficiency.

However, the small companies are likely to see some revenue respite in the coming months after Energy and Petroleum Regulatory Authority (Epra) reinstated caps on wholesale fuel prices since May 2023.

“Small dealers are having a fair share of their issues. But since the elimination of subsidy, we are seeing a real market driven system. SMEs within the energy sector have had a good time in the last three months with protection of EPRA” says Petroleum Outlets Association of Kenya (POAK) chair Martin Chomba.
The cap was withdrawn back in 2021 during the oil subsidy, forcing big oil marketers to sell fuel at negative prices thus eroding margins meant for small dealers.